Waxman-Markey cuts steeper than thought

Waxman-Markey’s emissions reductions goals will be more difficult to meet than previously thought, warned the electric utility industry in a July 6 letter to Senate Majority Leader Harry Reid (R-NV).

Edison Electric Institute chief Tom Kuhn wrote,

“H.R. 2454 would require a reduction of GHG emissions of 3 percent below 2005 levels by 2012–only three years from now. In reality, accounting for growth in electricity demand since 2005, the 2012 requirement is closer to a 10 percent reduction in projected GHG emissions. Achieving this near-term reduction would impose an abrupt and significant price increase on electricity consumers. The House bill also would require a very aggressive 17 percent reduction in GHG emissions below 2005 levels by 2020. Again, we support a more reasonable and achievable 2020 target that will help cushion the cost impact on our consumers.”

“We also strongly support inclusion of a price ‘collar,’ consisting of both a floor and a ceiling on emissions allowance prices, in climate legislation. This critical consumer protection measure would help limit economic harm to energy consumers, U.S. workers, and the economy, while discouraging market manipulation and encouraging technological development.”

(2) more free carbon allowances,

“Under H.R. 2454, allowances would sharply decline from 35 percent to zero over a five-year period from 2025 to 2029. Such a swift phase-out will lead to abruptly higher energy prices for consumers. Instead, we recommend a longer phase-out period of at least 15 years to help protect consumers from sudden energy price shocks.”

and (3) greater ability to participate in the fraudulent carbon offsets market,

“In addition, a number of improvements are needed in the offsets provisions. In the early years, offsets will be one of the few tools utilities will have for meeting targets. Quantitative restrictions, such as the 20 percent discount for international offsets, should be eliminated both to bolster the supply and to lower the price of domestic and international offsets. Moreover, a number of severe qualitative restrictions should be either eliminated or eased in order to assure a full and affordable supply of offsets.”